Consumers waiting for an interest rate cut have – in all likelihood – an even longer wait ahead, with most experts now changing their predictions for a rate cut only towards year-end (if at all) instead of their previous mid-year predictions.

There has been a string of bad news mostly related to inflation pressures following the last interest rate announcement that leaves little to no hope for an interest rate cut to occur at the next meeting scheduled for 30 May 2024. In fact, some even think that there is a possibility of a 0.25% hike.

This will be a hard knock for the real estate market, as many homeowners have been struggling to keep up with their bond repayments at the current level and are anxiously waiting for an interest rate cut to bring some relief.

“My advice to those who are struggling to keep up with their repayments is to reach out to the bank for assistance before things get too out of hand. It now seems probable that a small interest rate cut might only occur at the end of the year, so it’s no longer a matter of waiting a month or two for the situation to improve. The longer you go without addressing the issue, the harder it will be to make a full financial recovery.

If you catch the situation early enough, Goslett explains that your financial institution will likely be willing to add you to their bank mandated sales program. In these sorts of sales, the mortgage-holder usually volunteers to have the bank put the house on the market to recover the rest of the debt owed rather than attempt to catch up on the payments. In these cases, homeowners may still reject offers they deem too low, which gives the homeowner a better opportunity to recoup their losses and gain a fresh start.

“If you’re feeling like you are unable to get by without an interest rate cut in May, then it would be prudent to speak to your bank or reach out to a local RE/MAX Office to discuss your options – there might be ways for you to rent our your home to help bring in extra income, or other solutions you might not have considered yet. Even if the announcement on the 30th shocks us all and ends up being a cut, it is still better to be prepared and have a strategy in place in case rates don’t change, or worse still – they happen to increase,” says Goslett.

First quarter of 2024 surprisingly buoyant for property, says Seeff

Many areas performed better than expected, with some price sectors achieving better sales compared to the last quarter of last year. The highest price bands have been more active in some areas, mostly the Cape coastal areas, while the lower price bands continue to feel the strain of the higher interest rate.

Seeff added that it is as if buyers decided that they had waited long enough, and those who are committed to the country have gone ahead and invested in property. Indications are that the market might be about to take an upward turn, possible after the election, which would be good news for sellers, he adds.

The interest rate remains a factor in the market as it has had a notable impact on affordability, but also confidence as people are concerned about the economic outlook. An important upside to the current market is the favourable mortgage lending climate with average deposit requirements still well below what it was during the last economic downturn.

Lightstone data confirms that activity for the first quarter of 2024 was very similar compared to the first quarter of last year. Lightstone data shows that around 47,276 transactions with a combined value of just over R65 billion (R65,099,737,401) was recorded for the first quarter of 2024 (January to March period). The average transaction price for the first quarter is R1,377,014.

The bulk of activity remains below R1.5 million which represents some 71,4% of all transactions, while 19.7% fall between R1.5 million and R3m. Only about 9% of all property transactions fell above R3 million, although this sector of the market accounts for 36% of the value of all transactions, thus generating over R23.7 billion (R23,749,144,965) at an average price of around R5.5m.

By far the largest portion of sales were for freehold property which account for just under 50% (approx. 23,200) of all transactions, while sectional title account for just over 30% of all transactions (around 14,600 units). Freehold property transacted at an average price of just over R1.5 million and sectional title at just over R1 million.

The upper end of the market was also surprisingly buoyant, with very similar volumes compared to the first quarter of 2023, and notably better than the last quarter of last year. Lightstone data shows the overwhelming majority of transactions were concluded in Cape Town with sales of almost R800 million, mostly in the Atlantic Seaboard and City Bowl suburbs, and the Southern Suburbs.

The highest volume of R20 million-plus sales were in Clifton, Camps Bay and Constantia, but only one sale topped R50 million at the Waterfront. 32% Of sales were to international buyers, being three German buyers (at R20M, R23M, and R24.5M), two buyers from Switzerland (at R20M and R21M), and individual buyers from the UK buyer (R38M), Netherlands (R37M), Belgium (R25M), and the USA (R25M).

Areas such as Clifton, Camps Bay and the Waterfront have seen some of the highest volume of R20 million-plus sales over the last three years. Ross Levin, licensee for Seeff Atlantic Seaboard and City Bowl, says all things considered, the market does seem to be quite robust.

Constantia and Bishopscourt have also seen some of the highest volume of R20 million-plus sales over the last three years, and the momentum continues according to Francois Venter, who is a luxury market specialist with Seeff Southern Suburbs.

Buyers appear to be taking advantage of the flat price growth, says Seeff. House price growth has been around 2%-3% at best. Even with FNB noting improved activity during the first quarter, the FNB House Price Index pointed to average price growth remaining weak at around 0.7% as at February.